IUE AFL-CIO Pension Fund v. Barker & Williamson, Inc.

Decision Date10 April 1986
Docket NumberNo. 85-5385,AFL-CIO,Nos. 85-5385,85-5417 and 85-5429,85-5385,s. 85-5385
Citation788 F.2d 118
Parties1 UCC Rep.Serv.2d 205 IUEPENSION FUND and Lloyd J. Hayes, John S. Vozella, James C. Vito and Peter S. Di Cicco, Trustees of the IUEPension Fund, Appellants in, v. BARKER & WILLIAMSON, INC., Sentinel Electronics, Inc. and Timetco Corp. IUEPENSION FUND and Lloyd J. Hayes, John S. Vozella, James C. Vito and Peter S. Di Cicco, Trustees of the IUEPension Fund v. BARKER & WILLIAMSON, INC., Sentinel Electronics, Inc. and Timetco Corp. Appeal of SENTINEL INC. ("Sentinel"). IUEPENSION FUND and Lloyd J. Hayes, John S. Vozella, James C. Vito and Peter S. Di Cicco, Trustees of the IUEPension Fund v. BARKER & WILLIAMSON, INC., Sentinel Electronics, Inc. and Timetco Corp. Appeal of BARKER & WILLIAMSON, INC.
CourtU.S. Court of Appeals — Third Circuit

Andre Shramenko, Fort Lee, N.J., Thomas M. Kennedy (argued), Lewis, Greenwald, Kennedy & Lewis, P.C., New York City, for appellants IUE AFL-CIO Pension Fund, Hayes Vozella, Vito and Di Cicco in No. 85-5385.

Stanley A. Epstein (argued), Linda G. Harvey, Greenberg, Dauber & Epstein, Newark, N.J., for appellant Sentinel Electronics, Inc. in No. 85-5417.

Patrick C. English, Dines & English, Clifton, N.J., for appellant Barker & Williamson, Inc., in No. 85-5429.

Before ALDISERT, Chief Judge, and SEITZ and ADAMS, Circuit Judges.

OPINION OF THE COURT

ALDISERT, Chief Judge.

This appeal presents a question under federal pension laws and requires us to decide whether the district court properly held that the appellant corporation, Sentinel Electronics, Inc., was a member of a controlled group with Barker & Williamson, Inc. ("B & W"). B & W had ceased operations and defaulted on its payments to a pension fund. The district court held that Sentinel was a member of a controlled group with B & W, and deemed Sentinel to be the employer of B & W's employees. This determination imposed upon Sentinel liability for B & W's delinquent payments to the fund under provisions of the Multiemployer Pension Plan Amendments Act (MPPAA) of 1980, 29 U.S.C. Sec. 1381 et seq. (amending provisions of ERISA, 29 U.S.C. Sec. 1001 et seq.). We must also decide whether notice to B & W of its withdrawal liability, as required by the MPPAA, constituted constructive notice to Sentinel. We agree with the district court's controlled group determination. We disagree with its conclusion that notice to B & W was inadequate notice to Sentinel.

I.

From 1971 until 1982, B & W contributed to the IUE AFL-CIO Pension Fund pursuant to collective bargaining agreements. On February 26, 1982, after a transaction involving Sentinel stock, B & W closed down. Just prior to the shutdown on February 17, 1982 the Fund advised B & W that B & W would be liable for withdrawal liability from the Fund if it closed. On September 1, 1982, in accordance with the MPPAA notice provisions, the Fund demanded payment of withdrawal liability from B & W in quarterly installments. On November 2, 1982, the Fund advised B & W that it had failed to make its first quarterly payment.

Over six months later, the Fund brought a claim against B & W for withdrawal liability incurred under the MPPAA. The district court later permitted the Fund to amend its complaint to add Sentinel Electronics, Inc., and Timetco Corp. The amended complaint alleged these corporations were members of a controlled group with B & W, as defined by ERISA, and that all three corporations should therefore be deemed to collectively comprise a "single employer" of B & W's employees. Sentinel and Timetco moved to dismiss, arguing that they were not single employers within the meaning of ERISA. The district court rejected the dismissal motion as to Sentinel and held that Sentinel would be liable for withdrawal liability along with B & W. Sentinel thereafter requested arbitration of the amount of withdrawal liability, and the Fund refused. App. at A122-23. The Fund then moved for summary judgment against B & W and Sentinel, claiming that by not responding to the Fund's original demand for payment of withdrawal liability, B & W and Sentinel had waived their right to contest the demand. See 29 U.S.C. Sec. 1401(b)(1). Sentinel cross-moved for an order compelling arbitration.

The district court found that by not demanding review and arbitration of its withdrawal liability, B & W had waived its right to do so, and granted the Fund summary judgment against B & W for $168,871.00. The court, however, stayed the judgment pending an assessment of Sentinel's liability. App. at A162. But the district court reasoned that Sentinel did not know that it would be liable for B & W's withdrawal liability until the court's ruling binding Sentinel and that therefore Sentinel had ninety days after January 18, 1985, the date of the ruling, to request review by the Fund of its liability. Id. Because Sentinel could not request arbitration without previously requesting review by the Fund of its liability, see 29 U.S.C. Sec. 1401(a)(1), the court decided to consider Sentinel's April 8, 1985 request for arbitration as a request for review by the Fund, and granted Sentinel's cross motion to compel arbitration pending review of Sentinel's withdrawal liability by the Fund and a subsequent "timely demand [by Sentinel] that an arbitration be held." App. at A166-67. The Fund appealed, and Sentinel and B & W cross-appealed.

II.

In appeal No. 85-5385, the Fund argues that the district court erred on the question of notice. It contends that notice to B & W was sufficient notice to Sentinel. The court determined that no such notice was made until the court determined that Sentinel and B & W were members of a controlled group. In its cross-appeal, No. 85-5417, Sentinel argues that the district court erred by not granting summary judgment in its favor and by concluding that Sentinel and B & W were members of a controlled group under 29 U.S.C. Sec. 1301(b). Because both parties contend that they were entitled to summary judgment on these issues as a matter of law, review is plenary. See Goodman v. Mead Johnson & Co., 534 F.2d 566, 574 (3d Cir.1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d 748 (1977). B & W also filed a cross-appeal, No. 85-5429, challenging the district court's judgment against it for the full amount of withdrawal liability. However, because we find that appeal untimely, we will not address the merits.

III.

We first address B & W's cross-appeal at No. 85-5429. The district court entered its order granting judgment against B & W on May 20, 1985. The Fund filed its appeal on June 7, 1985. Two cross-appeals followed. Sentinel filed its cross-appeal thirteen days later. B & W, however, did not file its appeal until June 25, 1985, 35 days after the original order was entered, and 18 days after the Fund filed its notice of appeal.

Rule 4(a)(1), F.R.A.P., allows a thirty day period for filing appeals after "the entry of the judgment or order appealed from." Once any party files a timely appeal, "any other party may file a notice of appeal within 14 days after the date on which the first notice of appeal was filed, or within the time otherwise prescribed by this Rule 4(a) [30 days], whichever period last expires." Rule 4(a)(3), F.R.A.P. (emphasis supplied). Because the Fund filed its notice, the first notice of appeal, on June 7, 1985, the original thirty day period for appeals expired on June 19, 1985. Yet the fourteen day period allowed for filing cross-appeals expired two days later, on June 21, 1985. B & W's notice of appeal, filed June 26, 1985, was therefore five days late and will be dismissed as untimely. 1

IV.

Both B & W and Sentinel appeal from the district court's final order of May 20, 1985, which: (1) confirmed its earlier order finding Sentinel and B & W to be brother-sister controlled corporations; (2) denied the Fund's motion for summary judgment against Sentinel; and (3) granted Sentinel's motion to compel arbitration. Because the district court compelled arbitration, its order is reviewable as a final judgment under 28 U.S.C. Sec. 1291. See United Steelworkers v. American Smelting and Refining Co., 648 F.2d 863, 866 (3d Cir.1981) (citing Goodall-Sanford, Inc. v. United Textile Workers, Local 1802, 353 U.S. 550, 551-52, 77 S.Ct. 920, 921, 1 L.Ed.2d 1031 (1957)).

A.

ERISA incorporates the Internal Revenue Code's "controlled group" standards for determining whether two related corporations are within a controlled group and therefore deemed to be a single employer. 29 U.S.C. Sec. 1301(b). The district court found that B & W and Sentinel were brother-sister controlled groups under 26 U.S.C. Sec. 1563(a)(2). This section defines a brother-sister controlled group as one in which five or fewer persons own at least 80% of the voting stock of each corporation, and if the same persons own more than 50% of the voting stock, taking into account each person's interest only to the degree of identical stock ownership in each corporation. Id. In United States v. Vogel, 455 U.S. 16, 102 S.Ct. 821, 70 L.Ed.2d 792 (1982), the Supreme Court ruled that each of the five or fewer persons must own some stock in each corporation to meet the 80% test.

Under 29 U.S.C. Sec. 1383(a)(2) an employer completely withdraws from a multiemployer plan when it ceases "all covered operations." Because B & W ceased its operations on February 26, 1985, we are required to examine Sentinel and B & W's stock ownership as of that date. In early January 1982, Lee S. Engle owned 100% of Sentinel's stock and 75% of B & W's stock. B & W's president, Martin Piltch, owned the remaining 25% of B & W. stock. On January 27, 1982, Piltch reported to a joint meeting of the shareholders and Board of Directors of B & W that he had received and accepted an offer from Sentinel Electronics to purchase his 25% share of B & W. The shareholders and directors of B...

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